The current corporate tax rate applicable in Kenya is 30% in the case of resident corporations (i.e. limited liability companies). A non-resident company with a permanent establishment in Kenya is taxed at 37.5%. The tax is computed on the taxable income of a company, having deducted expenses which are wholly and exclusively incurred in the production of income.
There are preferential tax rates available for newly listed companies, pursuant to which the tax rates range from 20% to 27% for a period ranging from three to five years. The preferential rates depend on the percentage of listed shares made available to the public through the Nairobi Securities Exchange, as follows:
- 20% rate if 40% of issued share capital is listed – (for five year period).
- 25% rate if 30% of issued share capital is listed – (for five year period).
- 27% rate if 20% of issued share capital is listed – (for three year period).
For any other businesses owned by individuals directly or through transparent entities e.g. partnerships, the individuals are taxed on individual tax rates. The individual tax rates are based on a graduated scale ranging from 10% to 30%(see under individual taxation). Monthly income in excess of Kshs. 38,892 earned by an individual would be subject to tax at the highest bracket on the graduated scale (i.e. 30%).
All the non Resident entities are taxed through withholding tax regime.